Telstra Group Limited (ASX:TLS) operated its Dividend reinvestment plan for its FY26 final dividend, providing eligible shareholders with an alternative to receiving their entire dividend entitlement in cash. The final dividend was 10.5 cents per share, comprising 9.5 cents franked and 1.0 cent unfranked.

The final distribution followed an Interim Dividend of the same amount, taking Telstra’s FY26 total dividend to 21 cents per share compared with 19 cents in FY25. Under the DRP, eligible participating shareholders can reinvest all or part of their dividend entitlements in additional Telstra ordinary shares in accordance with the plan rules.

Latest developments

Telstra reported total income of AUD 23.405 billion for FY26, down 0.9% from the previous financial year. Reported EBITDAaL increased 3.0% to AUD 8.245 billion, while profit for the year increased 2.7% to AUD 2.406 billion. Basic Earnings Per Share increased 5.3% to 19.9 cents.

On an underlying basis, EBITDAaL increased 4.0% to AUD 8.341 billion, while Cash EBIT increased 8.0% to AUD 4.659 billion. Cash earnings rose 11.6% to AUD 2.876 billion and Cash EPS increased 13.8% to 25.5 cents. Underlying return on invested Capital increased to 9.0%.

The Board declared a final dividend of 10.5 cents per share, bringing the FY26 distribution to 21 cents per share. The annual dividend represented a 10.5% increase from FY25 on a cash basis and was approximately 90.5% franked.

Telstra also completed an AUD 1.25 billion on-market share buy-back during FY26 and announced an additional on-market buy-back of up to AUD 1 billion as part of its capital-management program.

Key numbers

The FY26 final dividend consisted of 9.5 cents per share of Franked Dividend and 1.0 cent per share of unfranked dividend. The interim dividend had the same composition, taking the total FY26 dividend to 21 cents per share.

Telstra recorded a DRP allocation price of AUD 4.7970 for the FY26 final dividend. The shares traded ex-dividend on 26 August, the Record Date was 27 August, the DRP election date was 4 September and the dividend was paid on 24 September 2026.

The company reported cash earnings of AUD 2.876 billion for FY26 compared with AUD 2.577 billion in FY25. Business-as-usual Capital Expenditure was AUD 3.365 billion, while underlying ROIC increased from 8.5% to 9.0%.

About the company

Telstra is a telecommunications and digital-infrastructure group providing mobile, fixed connectivity, enterprise, wholesale and related communications services across Australia and selected international markets.

The company’s Connected Future 30 strategy focuses on customer connectivity, network development, digital infrastructure, technology, operational sustainability and financial discipline. Telstra’s stated ambition under the strategy is to become the number-one choice for connectivity in Australia.

Mobile remains a significant part of the group’s operations. During FY26, mobile services Revenue increased 4.8%, while mobile EBITDA increased 3.3%. Telstra also continued investing in fibre, satellite and other connectivity infrastructure.

How the DRP works

Telstra’s DRP allows eligible shareholders to reinvest all or part of their dividend entitlements in additional Telstra ordinary shares. Participation is optional, and shareholders may nominate their full holding or a specific number of shares for participation.

Shares allocated under the DRP are priced using an average market-price methodology over the applicable pricing period. Under Telstra’s rules, the company may issue new shares, acquire existing shares on-market or off-market for transfer to participants, or use a combination of these approaches.

Shareholders participating in the DRP do not pay brokerage, commission or other Transaction Costs on allocated shares. Participation also does not affect eligibility for franking credits attached to the relevant dividend.

Why the DRP matters

The DRP provides eligible shareholders with a mechanism for converting dividend entitlements into additional Telstra shares rather than receiving the full distribution in cash.

For FY26, Telstra increased its annual dividend from 19 cents to 21 cents per share. The franking level changed from fully franked FY25 distributions to approximately 90.5% for FY26.

The DRP does not determine future dividend amounts or franking levels. Telstra states that dividend decisions remain subject to Board discretion, financial and market conditions, Business requirements and the maintenance of financial flexibility under its capital-management framework.

What comes next

Telstra continues to implement its Connected Future 30 strategy, under which management is targeting mid-single-digit compound annual growth in cash earnings through FY30 and an underlying return on invested capital of 10% by FY30.

Network capability and digital infrastructure remain areas of investment. The company’s strategy includes expanding fibre connectivity and satellite infrastructure while developing its network and customer offerings around increasing Demand for data and digital services.

Telstra is also progressing the additional on-market share buy-back of up to AUD 1 billion announced with its FY26 results. Future capital returns, dividends and DRP arrangements remain subject to financial conditions and Board decisions.

Risks and context

Telstra’s future distributions depend on cash generation, operating performance, investment requirements, financial conditions and Board approval. The FY26 total dividend of 21 cents per share exceeded statutory basic EPS of 19.9 cents, while Cash EPS was 25.5 cents, illustrating the difference between Telstra’s statutory and cash-based earnings measures.

Network reliability remains an operational consideration. Telstra experienced a mobile-network outage on 8 July 2026 that affected voice, messaging and data services and disrupted some Triple Zero calls. An external investigation identified weaknesses in the oversight and management of network timing, while the ACMA has been examining compliance with regulatory obligations associated with the outage.

Telstra also identifies competition, regulatory requirements, technological change, cyber and data-security issues, supply-chain disruption, network resilience and broader economic conditions among factors that could affect its operations and financial performance.

Key Insights

Telstra operated its DRP for the FY26 final dividend of 10.5 cents per share, with the distribution comprising 9.5 cents franked and 1.0 cent unfranked. Together with the interim dividend, the company distributed 21 cents per share for FY26 compared with 19 cents in FY25.

FY26 underlying EBITDAaL increased to AUD 8.341 billion and Cash EPS reached 25.5 cents, while Telstra completed an AUD 1.25 billion share buy-back and announced an additional buy-back of up to AUD 1 billion. The company is continuing its Connected Future 30 strategy while network resilience remains an operational focus following the July outage.